At least $500 million could have been spirited out of Zimbabwe through illicit financial flows this year alone, the country’s central bank chief, John Mangudya said.
This comes at a time government has been battling to raise revenue to finance critical national needs in the wake a shrinking revenue base and the absence of balance of payments support.
For this year alone, Zimbabwe has lost more than $500 million, which has no authentic, bona fide justification
“For this year alone, Zimbabwe has lost more than $500 million, which has no authentic, bona fide justification,” he is quoted saying by the state run Herald.
Mangudya said the funds, a very significant for a country with a $4 billion budget, are enough to buy about over half of the country’s yearly grain supplies.
The southern African country, which is staring at a drought, requires close to $702 million to procure 1.8 million tonnes of the staple maize annually.
The Reserve Bank of Zimbabwe governor claimed companies are diverting “funds from company accounts into individual accounts so they can take money out of the country”.
According to Global Financial Integrity Report, Zimbabwe has lost an accumulative $12 billion in the last three decades.
Illicit financial flows (IFFs) is money that is illegally earned, transferred, or utilised, in violation of laws in the country of its origin. Sources of funds may be legal, but their transfer may be illegal that is, tax evasion by individuals and companies.
Mangudya claimed that the culprits are sending cash to Mauritius, China or Pakistan. “That shows lack of confidence. How can you be confident that you love to live in Zimbabwe without your money?
“It’s a paradox. So if you are not happy with Zimbabwe its better you go and live where your money is. It’s a grave concern. I looked at the statistics and found out that it’s a cancer that we are brewing,” he said.
Results of a preliminary study in August last year showed that mining led the way in illicit financial flows due to gaps in the legislative framework governing the sector, thereby creating opportunities for corruption.
The results showed the government and investors had different statistics about the mining sector, contributing to tax avoidance through underreporting of the quantity, quality and composition of minerals.
According to the results, $2.7 billion was lost in the mining sector, $15 million in wildlife, $28 million in fisheries and $17.3 million in the timber sector.